question archive Michael Roberts is a cost accountant and business analyst for Darby Design Company (DDC), which manufactures expensive brass doorknobs
Michael Roberts is a cost accountant and business analyst for Darby Design Company (DDC), which manufactures expensive brass doorknobs
Subject:AccountingPrice: Bought3
Michael Roberts is a cost accountant and business analyst for Darby Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct cost categories: direct materials and direct manufacturing labor. Roberts feels that manufacturing overhead is most closely related to material usage. Therefore, DDC allocates manufacturing overhead to production based upon pounds of materials used. At the beginning of 2017, DDC budgeted annual production of 410,000 doorknobs and adopted the following standards for each doorknob: Input Cost/Doorknob Direct materials (brass) 0.3 lb. @S9/ib. $ 2.70 Direct manufacturing 1.2 hours @S16/hour 19.20 labor Manufacturing overhead: Variable Fixed Standard cost per doorknob $4/lb. x 0.3 lb. $14/lb. x 0.3 lb. 1.20 4.20 $27.30 Actual results for April 2017 were as follows: Production Direct materials purchased Direct materials used Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead 32.000 doorknobs 12,900 lb, at $10/1b. 9,000 lbs. 29,600 hours for $621,600 $64.900 $160,000 Required: For the month of April, compute the following variances, indicating whether each is favorable (F) or unfavorable (U): a. Direct materials price variance (based on purchases) b. Direct materials efficiency variance c. Direct manufacturing labor price variance d. Direct manufacturing labor efficiency variance e. Variable manufacturing overhead spending variance f. Variable manufacturing overhead efficiency variance g. Production-volume variance h. Fixed manufacturing overhead spending variance
